£4.7bn from HS2 redirected to North and Midlands

The government has reallocated £4.7bn from the axed HS2 Northern leg towards local transport in the North and Midlands.

The Local Transport Fund, part of the government’s Network North programme, will distribute £2.5bn to local authorities in the North of England and £2.2bn to councils in the Midlands over seven years, starting in April 2025.

Councils will be responsible for spending the investment, although they will need to consult with their local MPs.

Rishi Sunak will hold a cabinet meeting in Yorkshire today (26 February), where he is expected to call on ministers and MPs to hold local authorities accountable for using the funding responsibly and listening to local people.

Sunak said: “We have a clear plan to level up our country with greater transport links that people need and deliver the right long-term change for a brighter future.

“Through reallocating HS2 funding, we’re not only investing billions of pounds directly back into our smaller cities, towns and rural areas across the North and Midlands, but we are also empowering their local leaders to invest in the transport projects that matter most to their communities – this is levelling up in action.”

Funding will be allotted to 27 local authorities outside the city regions, which receive City Region Sustainable Transport Settlements (CRSTS).

The new investment will supplement the £55,000 per year currently allocated to these councils under the Integrated Transport Block scheme, which supports transport-improvement schemes worth less than £5m.

Transport secretary Mark Harper told Parliament that the funding might be used for new roads, mass transit systems, electric vehicle charging points, refurbishing bus and train stations and filling in potholes.

He also said the fund represented a commitment to reinvest all the £19.8bn intended for the Northern leg of HS2 into the North and £9.6bn from the Midlands leg into the Midlands.

The £6.5bn saved by handing over responsibility for building the HS2 Euston site to the private sector would be spent across every other region in the country. The Public Accounts Committee criticised the government earlier this month for lacking a plan to attract private investment towards the Euston scheme.

Harper said: “Today’s £4.7bn investment is truly game-changing for the smaller cities, towns, and rural communities across the North and the Midlands and is only possible because this government has a plan to improve local transport and is willing to take tough decisions like reallocating funding from the second phase of HS2.”

Alasdair Reisner, chief executive of Civil Engineering Contractors Association, said: “In recent years a lot of councils have lost a lot of resource and capability due to budget pressure. As such, their ability to suddenly deal with an uplift in cash may be limited.

We have seen in the past in that a lot of money can go on the development of schemes without appropriate reference to the budget available. This means a lot of time and money can be expended on schemes that actually aren’t viable because they don’t meet Department for Transport (DfT) spending requirements.

As such, councils could find themselves actually losing money as they spend money to develop projects, only to discover they don’t meet the DfT’s specific business case approval requirements to unlock the Local Transport Funds.

“We would want to see more information about how the Government will ensure that projects are developed in a way to ensure that they are affordable and deliverable.”

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